$80m to be set aside for banking sector in next year's budget
KABUL (PAN): The government will have to set aside $80 million in next year's budget for the banking sector if loans released by the troubled Kabul Bank are not recovered, the finance minister said on Sunday.
Hazrat Omar Zakhilwal told a press conference in Kabul the bailout package was necessary to maintain the value of the afghani against major foreign currencies.
A number of individuals were paid $800 million in loans by the Kabul Bank and so far $70 million had been recovered, the minister said. Borrowers have promised to repay $350 million, with $110 million property pledged in this regard.
Finance Ministry spokesman, Aziz Shams, told Pajhwok Afghan News the central bank had provided $825 million in loan to the Kabul Bank after it plunged into a deep crisis last year.
The government assured the International Monetary Fund (IMF) it would allocate $825 million over the next eight years to the central bank, if bad loans issued by the Kabul Bank were not recovered, Shams said.
The Wolesi Jirga on Saturday approved $51 million (about 2,430 million afghanis) to help the central bank overcome the financial crisis. The amount was approved after the IMF stopped an expected $70 million reconstruction payment to Afghanistan due to concerns about lax financial oversight.
Previously, Parliament had refused to okay a $73 million bailout package for the banking sector's development and alleviating the Kabul Bank crisis, which almost collapsed due to mismanagement and infected portfolio.
The finance minister said efforts were underway to ensure the repayment of loans issued by the Kabul Bank. He hoped efforts at recovering the loans would come to fruition.
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